The rise of remote work led to many people and companies leaving high-cost coastal cities. This redistribution of talent has changed how early-stage venture capital is deployed. Before, investors would invest only in entrepreneurs whom they could meet in person. Many investors preferred to not travel, so founders migrated to cities with a high concentration of venture capital investors. But the pandemic and the redistribution of talented entrepreneurs changed this. Investors now regularly invest in founders whom they’ve met only over Zoom.

I’ve been thinking about the tech layoffs by large companies like Amazon and Google and what they’ll do to the distribution of talent. I suspect that a material number of people laid off by these companies will rethink living in their high-cost cities, especially if their job was the main thing keeping them there.

I could be wrong, but if this does play out, I’m curious about how venture capital will adjust. If a lot of talented founders no longer want to reside in the Bay Area, for example, how will these firms adjust? Will they continue to stay heavily concentrated in places like the Bay Area and do even more investing over Zoom? Or will they rethink where their firms or their firms’ investors live?

This is my one-hundred-forty-seventh weekly reflection. Here are my takeaways from this week:

• Tech Layoffs – This week Google announced a 12,000 headcount reduction. Earlier this week Microsoft announced a 10,000 headcount reduction. The layoffs are terrible for those impacted. I believe we’ll see a material uptick in entrepreneurship and more of these people migrating to lower-cost cities like Atlanta.
• Focus on Simple Ideas – I’ve been thinking about this all week. Outsized success is the result of intensity applied to simple ideas.  
• History Lesson – I had a long conversation with an elder about historical events I wasn’t familiar with that shaped the world in ways I wasn’t aware of. I’ve been thinking about this conversation and learning more about the events he shared with me. I want to start digging into history more to better understand the events that led to today’s society.  

Week one hundred forty-seven was a steady week. Looking forward to next week!

When I finished college, I crowdsourced my transition to corporate America. I asked for advice on a blog and got a lot of great feedback. Recently, I reviewed it. This one stuck out to me:

Never turn down a weekend with friends. Use some of that new hard-earned cash to continue building your friendships from college and maybe rebuild those ones that died while you were away studying.

As a founder I sometimes followed this advice, but I ended up saying no to many social events because I was too busy building a company. I regret saying no to some of those milestone events because they ended up being once-in-a-lifetime opportunities with friends—memories I wasn’t a part of.

I now approach this differently. When close friends or family invite me to something that’s a milestone, I try my hardest to attend and be totally present. The work will always be there, but opportunities to spend time with friends or family at milestone events are closing windows of opportunity that I want to take advantage of before they’re gone.

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Earlier this month, I shared my predictions about tech layoffs changing the risk/reward dynamic in favor of entrepreneurship. Today, Microsoft announced that it’s reducing headcount by 10,000 people through Q3 2023. This is on top of other sizeable layoffs announced in the last few months by Amazon, Salesforce, and Facebook.

As more tech workers capable of building products are laid off, the risk/reward calculation tilts more in favor of entrepreneurship for some of them. This could be the year that many of these people bet on themselves.

“Start-ups die of suicide, not murder.” It’s a common saying. It means that most start-ups fail because of self-inflicted wounds like bad decisions, not competition. This is true, but even so, it’s critical for early-stage founders to know the competition when pitching investors.

Investors backing founders at the spearhead of company formation want to back someone who understands a problem and the market for it better than anyone else. They expect the founder to have identified something others don’t see that will allow them to succeed. Part of this process should include understanding existing solutions and why they don’t adequately serve the market. That doesn’t mean you aim to mirror what your competitors have done. It does mean you know how your solution will create more value than competitors’.

If you’re an early-stage founder and you don’t know your competition or can’t speak to how your solution is superior, you’ve diminished your chances of getting capital from investors.  

I wanted to take today to celebrate the late Dr. Martin Luther King Jr. His contributions to society were foundational in moving our country closer to equality for all.

Hope everyone had a great MLK Day!

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A few months back, I shared Reid Hoffman’s belief in keeping his expectations of meetings low to allow for serendipity. That really stuck with me, and I’ve embraced it, which has indeed led to some serendipity. Since then, I’ve been thinking about how to lean into encouraging more serendipity.

I’ve started to think about how to make room for serendipity through my normal nonwork interactions. I’ve landed on something that’s worked. When I’m doing normal everyday things, I now try to go to new or unfamiliar places to get exposure to new establishments, neighborhoods, and people. A simple example is dinner. Most people have their go-to restaurants and neighborhoods. These places are where they’re comfortable and what they know. Instead of sticking to your favorites, find new places (preferably with good reviews) in an area you don’t frequent. While you’re there, try to understand the people and the area.

I recently had dinner in a part of town I don’t usually go to. The place has good reviews, so I was excited to try it. Instead of grabbing a table, my companion and I chose to sit at the bar. Because we did, we had amazing conversations. The bartender gave us a history of the restaurant and its ownership. And we met another couple at the bar who build custom homes. They gave us a boots-on-the-ground perspective of the Atlanta housing market and shared some information we otherwise wouldn’t be aware of. We all agreed to keep in touch.

Serendipity, by definition, happens by chance, but you can be intentional about increasing the probability of it through your decisions about everyday activities.

Someone mentioned a quote to me this week that stuck with me:

Take a simple idea and take it seriously.

I did some digging and found that the quote is attributed by many people to Charlie Munger, but I’m not sure whether it originated with him.

When I read this quote, it reminds me that focus can lead to outsize outcomes. Successful people often had a simple idea at the core of their success. The idea itself often wasn’t earth-shattering—it was how seriously they took it that made all the difference. They thought deeply about it—to the point that they became fanatically intense about it. Eventually, they shifted their intensity to executing on their idea. Execution is often the hardest part, but because they had such conviction, they pushed through challenging times that would have caused others to throw in the towel. When the dust settled and they looked back, they’d taken a simple idea that other people probably also saw to a new level because they focused intensely on it.  

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This is my one-hundred-forty-sixth weekly reflection. Here are my takeaways from this week:

• Fundraising season – I talked to several founders this week, asking for feedback on fundraising materials. Some attempted to raise last year, but market conditions were too bad. Some simply delayed raising. I suspect that starting around February a significant number of companies will kick off fundraising.
• Wise people – I researched Charlie Munger and noted some of his lessons learned. He’s got almost 100 years of wisdom. Seeking out the wisdom of highly successful people has such a high ROI. With platforms such as YouTube, podcasts, and good old books that are available online, their wisdom is more accessible than it’s ever been. I wonder if people realize its value.
• Multipliers – Founders who have this mindset are on a different level than other founders. The potential reward of multiplying is worth the risk of betting it all (or most of it), in their mind. I like this mindset, and I’m thinking about ways to identify the multiplier trait when founders are first starting out.

Week one hundred forty-six was a solid week. Looking forward to next week!

Last week, Fred Wilson shared his predictions for 2023. Fred’s a well-known VC and general partner at Union Square Ventures. His thoughts on start-ups in 2023 were of interest to me. A few points that founders should take note of:

• 2023 will be a tough year for start-ups. As money-losing companies, many avoided raising in last year’s difficult environment. They’ll be forced to raise this year as their cash dwindles.  
• VCs have ample capital to invest but will be more selective. Companies with product–market fit, strong teams, and good unit economics will be able to raise. Start-ups that don’t have these things will struggle to raise, regardless of valuation, and many will fail.
• Valuations will return to the levels of 2015 or so. Seed rounds will be around $10m, Series A rounds around $15–$25m, Series B rounds around $25–$50m, and growth rounds capped at 10x revenue.
• Lower valuations will lead to flat rounds, down rounds, inside rounds, and lots of structure in the rounds. CEOs and boards should accept the pain of lower valuations over a lot of structure.

Fred’s predictions come from someone who’s seen a few VC cycles. Things won’t necessarily play out just as he’s said, but his predictions are something for founders to be aware of.

I’ve had chats with a few founders in the last week about their next funding round. Many have accepted the current valuation environment but haven’t processed what impact a down round or one with lots of structure will have on the cap table and start-ups overall.

I’m of the opinion that Q1 will set the tone for 2023. If the rate of decline in public markets we saw in 2022 persists, Fred’s predictions are more likely to be accurate. If public markets are flat to slightly up, I think conditions for start-ups could be slightly better than Fred predicts.

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